Beware of Debt Consolidation Companies

You’ve probably heard or seen advertisements featuring buzzword phrases such as “Don’t let credit card companies trick you into thinking you have to pay all your debt back!” and “Consolidate your debts into one low monthly payment!” While these promises may sound great, they’re like almost any other deal that sounds too good to be true: odds are it’s probably not true at all. In fact, those who rely on these debt consolidation companies can find themselves in worse situations than before, both in terms of their credit score and their financial affairs. Here are some reasons to beware of debt consolidation companies and instead go a more traditional route when struggling with your debts.

What is Debt Consolidation?

Debt consolidation is about as simple as it sounds: combining your various credit card or student loans debts into one large debt that you make a single payment on every month until it’s paid off. This gives you a more predictable single payment that takes care of all of your consolidated debts at once, and helps you avoid the negative consequences of having bankruptcy and discharged debts on your financial history.

What Consolidation Companies Do

Debt consolidation companies essentially become negotiators on your behalf and work with your creditors to develop a consolidation plan that gives you the single payment. You simply submit a list of your debts, the company contacts your creditors, negotiates with them, creates the plan, then charges you a fee each month. Some also charge a setup fee.

However, in the long run, these companies may not actually be saving you that much money, and in fact you might be paying a lot more for the same debt. There’s no guarantee that a debt consolidation company will absolve you of any portion of your debt. While they might claim you may only have to pay a portion of what you owe, they are under no obligation to try to reduce your debt whatsoever. Instead, these companies simply lump all your debts together and extend the duration of your loan in order to decrease the amount you have to pay each month. Over time, between the interest and service fees you’re paying plus the longer life of the loan, you may wind up paying more for your debt. And to make matters worse, if your sued, a debt consolidation company cannot defend you in court or provide any legal guidance.

Instead, let a New York debt relief attorney work with you to consolidate your debts, and in the long run you’ll find you may actually save money and give yourself a better chance of getting out of debt.

Debt Consolidation Lawyers - NY & NJ

Regardless of whether your issues are with defaulted credit card accounts, medical bills, timeshare debts, cash advances, or if you're in need of a student loan debt consolidation, count on our experienced legal team to help you compare your options and arrive at the best course of action. We understand the stress of having debt collectors calling and sending letters, and work strategically to help achieve a resolution within our client's budget.